By Theresa Sheehan

PRINCETON (SMRA) – The week ahead has a variety of important data
reports, much of it first-tier data with the potential to shape the
economic outlook.

Topping the list may be the retail sales numbers for October to be
released at 8:30 ET Monday. The weekly data on retail activity were
mostly lackluster over fiscal October, but ended on a strong note in the
final week with the approach of Halloween. There may have been a pause
in October for many types of retailers as the back-to-school shopping
period ended in September, and the holiday sales period had yet to rev
up in November. At the same time, total retail sales may get a boost
from higher gasoline prices and a rise in motor vehicle sales.

Later Monday morning, at 10:00 ET, the data for September
business inventories will be released, and will include the retail
component. So far wholesale inventories were up 1.5% and factory
inventories rose 0.7%.

The October CPI report at 8:30 ET on Wednesday is preceded by the
PPI data at the same time Tuesday. Both are likely to reflect the recent
increases in commodities costs for food and energy, and for other items
like precious metals, industrial metals, and cotton — though there may
also be offsetting movements. On the producer side, most companies will
do whatever they can to avoid passing on rising input costs, but some
eventual pass-through is likely. For consumers, prices have already been
increasing for items like coffee and jewelry.

October starts of houses and permits issued at 8:30 ET on Wednesday
will probably be close to the current trend of starts near historic
lows, and permits signaling only small increases in the next few months.

The NAHB/Wells Fargo Housing Market Index for November will be at
10:00 ET Tuesday. That index regained some ground in October, rising 3
points to 16, the highest reading since June. Given the continued
uncertainties for the housing market with unemployment still high, this
is unlikely to take another jump higher, but it may show some further
incremental improvement.

Data on industrial production and capacity utilization for October
at 9:15 ET should decline on drops in utilities during a period of mild
weather. The size of the fall will probably be greater than the modest
increases expected in mining and manufacturing.

Fed District Bank manufacturing surveys are scheduled from the New
York and Philadelphia Feds at 8:30 ET Monday and 10:00 ET Thursday,
respectively. In the respective October surveys, the activity indexes
seemed to be on the upswing from the lower readings that marked the
latter part of the summer. November is likely to strengthen further.

The Conference Board’s Leading Economic Index for September should
see another month of readings signaling growth. Positive contributions
are expected from interest rates, stock prices, building permits, money
supply, the workweek, confidence and initial claims.

Initial claims for the week ended November 13 will include the
survey comparison week data from the October 16 week and there should be
a noticeable step down from the 455,000 level in the prior month. This
could suggest another favorable employment report for November.

In U.S. Treasury auctions, the first leg of the quarterly refunding
will settle on Monday. New 2-, 5-, and 7-year notes will be announced on
Thursday to be auction the following Monday through Wednesday,
respectively.

Public appearances by Fed officials are going to grow scarcer as
the holiday season approaches. After the FOMC announcement, comments
will focus on how to successfully manage the $600 billion in asset
purchases, both in buying and eventually exiting the expanding balance
sheet.

There will be a few appearances by Fed officials during the week.
The focus is beginning to shift away from the large-scale asset purchase
program and back to the economy and regulatory issues. Atlanta Fed
President Lockhart gives a speech Monday, and St. Louis Fed President
Bullard and Boston Fed President Rosengren both speak Wednesday at
separate events.

Governor Warsh will take part in a panel discussion on Thursday.
Philadelphia Fed President Plosser will be in Washington at the Cato
Institute. Chairman Bernanke will be in Germany to attend an ECB
conference, and will give the keynote speech on Friday along with
participating in a panel discussion that includes ECB President Trichet.

On Tuesday, the Senate Banking Committee is expected to vote on the
re-nomination of Peter Diamond as a Governor of the Federal Reserve. It
is expected that the Committee’s recommendation will be for a full
Senate vote, which in turn will probably be scheduled before the current
Congress goes on its mid-winter recess before the next Congress is
seated.

** Stone & McCarthy Research Associates **

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